Homeowners insurance covers property damage and/or injury due to natural or man-made disasters. Floods, fire, earthquakes, hail, storms, etc. are covered. The great thing is that most homeowners’ insurance companies will pay to make the home livable again for some time after the disaster happens. If a flood has swept the home and property clean, the insurer might pay for cleaning up the basement.
To determine the coverage, ask your agent for your home’s risk factors. Does your location put you at high risk for natural disasters? Have you recently purchased a second or third residence? The insured will want the home to be completely protected from every natural disaster, even though the insurance agent may not mention the coverage to the buyer until the closing table. On the other hand, the insurance company may require you to obtain a separate water damage policy, flood coverage, or risk exclusion before purchasing the homeowner’s policy, noted Heath Ritenour.
Second, home insurance provides coverage for the home itself. If a house is robbed or burglarized, the policy pays to repair the home, depending on the policy. For example, home insurance does not cover the loss of personal property in a burglary or fire. Another common claim type is damage to a vehicle. Home insurance may cover repair or replacement of the car that is damaged but does not include a replacement car in the policy. Heath Ritenour: It pays to check your policy on this point, and check that it is right for you. Sometimes there are special coverage requirements.
Oftentimes, you can get a “flat” policy with comprehensive coverage from a large insurer, with lower premiums. In addition to covering loss and damage, it is also a good idea to get some information about the property from the insurance company. Heath Ritenour, “As a buyer, you can then make an informed decision about what type of policy to buy and from what company.” In a traditional home insurance policy, the mortgage lender only gets the value of your home as long as the lender receives full payment, which means a loss in value can come at the owner’s expense.